VOL. 34 | NO. 1 | JANUARY/FEBRUARY 2019Fraud-Magazine.com

Who’s more susceptible to fraud? P. 25

5 most scandalous frauds of 2018 P. 40

Motivations of honesty P. 50

‘Psychic’ Maria Duval P. 16

Why don’t auditors find fraud? P. 20

Bastian

Obermayer

Journalist

finds

strength

in numbers

to keep

truth

alive

Panama Papers reporter and

ACFE Guardian

Award recipient

P. 32

FRAUD-MAGAZINE.COM JANUARY/FEBRUARY 2019 FRAUD MAGAZINE 3

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FM

FM

FROM THE PRESIDENT

hen you think of how the Panama Papers

unfolded, you could imagine a scene

from a movie: a hero with great hair

meeting with an anonymous source on a park bench

and exchanging code words.

But, as we know, our realities can be much strang-

er than fiction. The initial exchange of the Panama

Papers began at Bastian Obermayer’s parents’ home

in Germany. His wife and kids were sick with stomach

bugs, and he was graciously cleaning up one mess

after another. In his words, it was a “really bad day.” He

couldn’t know that one strange email would change

his life, his newspaper and investigative journalism

forever. The subject line read, “Interested in data?”

Bastian had no idea what he’d received at first, as

we read in the cover article by Emily Primeaux, CFE,

page 32. “John Doe” mentioned that his or her “life

is in danger.” After Bastian received document after

document, he knew this was bigger than he could’ve ever imagined. The documents exposed

powerful people in business, industry and government from around the world who were using

a small law firm based in Panama to hide assets and escape tax liabilities. Like the beginning of

many fraud examinations, Bastian slowly pulled together an investigative journalist team at his

German newspaper, Süddeutsche Zeitung.

The data from the anonymous source kept growing, so Bastian requested larger computers

from his newspaper to handle the strain of analyzing so many documents.

Then, like so many fraud examiners, he realized he needed help. Bastian reached out to the

International Consortium of Investigative Journalists (ICIJ), an invitation-only club for investiga-

tive journalists to which he belonged. ICIJ members — who are from around the globe — helped

determine the distinctive regional importance of the information written in their languages.

As we often do in our fraud examinations, he needed to assemble the pieces of a puzzle, but his

consisted of more than two terabytes of data and 11 million documents.

Only a unified team of journalists could’ve thoroughly analyzed the Panama Papers. Four hun-

dred voices via dozens of global media outlets — not just one newspaper — proclaimed the news.

Bastian had the ICIJ’s support to understand and disseminate the Panama Papers. As like-

minded CFEs, we also can collaborate and encourage each other — equipped with a dynamic

body of knowledge and expertise honed through experience — in our battle against fraud and

corruption. n FM

Bruce Dorris, J.D., CFE, CPA, is president and CEO of the ACFE. Contact him at

President@ACFE.com.

Unified truth seekers expose

fraud and corruption

W

4 FRAUD MAGAZINE JANUARY/FEBRUARY 2019 FRAUD-MAGAZINE.COM

Contents Volume 34, No. 1, January/February 2019

FEATURES

COVER STORY

Journalist finds strength in numbers to keep truth alive

By Emily Primeaux, CFE

Pulitzer-Prize winning investigative

journalist Bastian Obermayer set into

motion the largest collaborative event

in the history of journalism when he

initiated the Panama Papers. He’ll re-

ceive the ACFE’s Guardian Award and

speak at the 30th Annual ACFE Global

Fraud Conference in Austin, Texas, June

23-28.

20

25

40

50

5 most scandalous fraud cases of 2018

By Sarah Hofmann, CFE

What really motivates people to be honest in business? Q&A with Alexander F. Wagner, Ph.D.

By Dick Carozza, CFE

Why don’t auditors find fraud?

By Ralph Summerford, CFE

Who’s more susceptible to fraud?

By Donn LeVie Jr., CFE

32

20

32

40 50

25

what don’t auditors find fraud?

Bastian Obermayer, Panama Papers reporter

scandalous frauds of 2018

who’s susceptible to fraud?

alexander wagner, ph.d.

FRAUD-MAGAZINE.COM JANUARY/FEBRUARY 2019 FRAUD MAGAZINE 5

Publisher John Gill, J.D., CFE

Editor-in-chief Dick Carozza, CFE

Associate Editor Emily Primeaux, CFE

Contributing Editors Cora Bullock; Scott H. Patterson; Randi Zimmer, CFE

Legal Editor Ron Cresswell, J.D., CFE

Contributing Writers Robert Tie, CFE, CFP; Donn LeVie Jr., CFE

Art Director Helen Elliott, CFE

Designer Becky Plante

Circulation Manager Aimee Jost, CFE

Advertising Coordinator Travis KolajaContact: (800) 245-3321 | tkolaja@ACFE.com

Editorial Advisory CommitteeJonathan E. Turner, CFE, CII, chair; Emmanuel A. Ap-piah, MBA, CPA, CFE; Johnnie R. Bejarano, DBA, CFE, CPA, CGMA; Richard Brody, Ph.D., CFE, CPA; Jeimy J. Cano, Ph.D., CFE, CAS; Courtney Castelino, CFE, CPA, CA, CBV, CFF; Franklin Davenport, CFE; David J. Clements, CFE; Peter D. Goldmann, CFE; Robert Holt-freter, Ph.D., CFE; Robert Kardell, CFE, CPA; Thomas Cheney Lawson, CFE, CIA; Philip C. Levi, CFE, CPA, FCA; Larry Marks, CFE, CISA, PMP, CISSP, CSTE; Jimmy S. Pappas, CFE; Cecily Raiborn, Ph.D., CFE, CMA, CPA (Texas); Rob E. Shaff, CFE; Katharina Shamai, CFE, CIA, CA, IIA; Herbert Snyder, Ph.D., CFE; Scott Strain, CFE; Karen Forrest Turner, Ph.D., Educator Associate; Stéphane Vuille, CFE, PCI

2018-2019 Board of RegentsAlexis C. Bell, CFE, PI; Bruce Dorris, J.D., CFE, CVA, CPA; Ryan C. Hubbs, CFE, CIA, CCEP; Jeanette LeVie, CFE; Tony Prior, MBA, CFE; Vidya Rajarao, CFE, CA; Elizabeth Simon, CFE, CPA; John Warren, J.D., CFE

Fraud Magazine (ISSN 1553-6645) is published bimonthly by the Association of Certified Fraud Examiners, 716 West Avenue, Austin, TX 78701-2727, USA. Periodical postagepaid at Austin, TX 78701 and at additional mailing offices.

Postmaster — Please send address changes to: Fraud Magazine | ACFE Global Headquarters 716 West Avenue | Austin, TX 78701-2727, USA(800) 245-3321 | +1 (512) 478-9000Fax: +1 (512) 478-9297

SubscriptionsACFE members: annual membership dues include $45 for a regular one-year subscription; $15 for an electronic member subscription, and $15 for student, and retired member subscriptions. Non-member subscription rates are: $65 in the U.S.; $77 outside the US. Membership information can be obtained by visit-ing ACFE.com or by calling (800) 245-3321, or +1 (512) 478-9000. Change of address notices and subscriptions should be directed to Fraud Magazine. Although Fraud Magazine may be quoted with proper attribution, no portion of this publication may be reproduced unless written permission has been obtained from the editor. The views expressed in Fraud Magazine are those of the authors and might not reflect the official policies of the Association of Certified Fraud Examiners. The editors assume no responsibility for unsolicited manu-scripts but will consider all submissions. Contributors’ guidelines are available at Fraud-Magazine.com. Fraud Magazine is a double-blind, peer-reviewed publication.

To order reprints, visit Fraud-Magazine.com/reprint or email reprints@fraud-magazine.com.

© 2019 Association of Certified Fraud Examiners, Inc. “ACFE,” “CFE,” “Certified Fraud Examiner,” “CFE Exam Prep Course,” “Fraud Magazine,” “Association of Certified Fraud Examiners,” “Report to the Nations,” the ACFE Seal, the ACFE Logo and related trademarks, names and logos are the property of the Association of Certified Fraud Examiners, Inc., and are registered and/or used in the U.S. and countries around the world.

AR

FROM THE PRESIDENT

Unified truth seekers expose fraud and corruption

Bruce Dorris, J.D., CFE, CPA

FRAUD IN THE NEWS

Cinema heists, fraudulent pet food and more

Compiled by Randi Zimmer, CFE

CAREER CONNECTION

If the shoe fits ...

By Bethmara Kessler, CFE

FRAUD BASICS

Change-of-banking-details scheme defrauds quietly

By Kashmita Reddy, CFE

BIG FRAUDS

Did ‘psychic’ Maria Duval make a deal with the devil?

By Steve C. Morang, CFE, CCEP

INNOVATION UPDATE

Accelerating anti-fraudinnovation

By Vincent M. Walden, CFE, CPA, and Eric Johnson

EMERGING MARKETS’ RISKS

Emerging markets conundrum: Does growth equal risk?

By Arpinder Singh, CFE

GLOBAL FRAUD FOOTPRINT

Canadian casino money laundering exposes greater fraud problems

By Mason Wilder, CFE

TAKING BACK THE ID

During tax season beware risks of losing your identity

By Robert E. Holtfreter, Ph.D., CFE

I’M A CFE

, CFE

By Emily Primeaux, CFE

ACFE NEWS

CPE QUIZ

3 60

64

66

68

72

8

12

16

56

6

70

56 62

accelerating anti-fraud innovation

nigel palmer, cfe